Fannie Mae announced a new program on Thursday that may look like steak to some but taste like beef jerky. The program is called ‘The Deed for Lease Program.

‘The Deed for Lease Program”is a temporary solution to the foreclosure problem. The program is for homeowners who DO NOT qualify for a loan modification program but DO NOT want to move from their home.

In this program the borrower voluntarily transfers the deed back to the lender and the lender rents back the home to the borrower at Fair Market Value or no more than 31% of the borrowers gross monthly income.

Doe this sound familiar. It should because the 31% is also used as the criteria for the Home Affordable Modification program (HAMP) program. If Borrowers did not qualify for a home modification program why would anyone think the lender would now rent the same home to some who has defaulted on their mortgage and would not be considered a good candidate for a new loan.

There seems to be a flaw in logic to this plan. It may look like steak, smell like steak, but it taste like beef jerky…